Love pushed beyond its paroxysm leads to suffocation. That is the moral of this article, which depicts an altruistic parent setting her labour supply to offer the best living conditions to her child. When parents and children are perfectly substituable in production, this behaviour pushes all wages down. If hourly wages are rigid, employment is rationed and the youth are the primary victims of such rationing. We show this mechanism may originate endogenous fluctuations between under and full employment when the older workers’ productivity negatively responds to past unemployment. We also analyse the political support for the minimum wage. When the youth productivity is random, the minimum wage, the older workers’ labour supply and youth unemployment together rise with the intensity of parental altruism.
Volume (Year): 72 (2006)
Issue (Month): 1 ()
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